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Guest pioneer31

Dropping Ir's Will Revive The Economy

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Guest pioneer31

So, dropping IR's like a stone will revive our Economy eh?

How does decimating interest on savings (which a great many people rely on) do anything? I, for one will be reigning in my spending, now that my income (earnings + interest) is being slashed.

OK, so the borrowers will get respite (for now, until the banks creep the rates back up again).

IF inflation drops to 1% or less and who says it will?, then things are still getting more expensive, even though my interest has been slashed by 1/3 (and more to come).

Every way you turn, you're buggered

Edited by pioneer31

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Guest pioneer31
er...because you get that little interest you may as well spend? Just a guess...

Is that how human beings think?

I'm saving for a deposit but now that my overall income has decreased, I'm going on a spending spree?

Spock wouldn't agree with that one.

Edited by pioneer31

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I'm saving for a deposit, I'm not going on a spending spree of chinese junk, just so that I can kid myself that my money isn't eroding.

If house prices are falling, and your savings are for the specific use as "a deposit", how can the value of your savings be eroding? Surely the value of your "break glass in case of house purchase" savings is totally unrelated to the value of anything other houses, because that's the only thing it's going to be used to buy?

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Guest pioneer31
If house prices are falling, and your savings are for the specific use as "a deposit", how can the value of your savings be eroding? Surely the value of your "break glass in case of house purchase" savings is totally unrelated to the value of anything other houses, because that's the only thing it's going to be used to buy?

It doesn't matter what my fund is for, the fact is

my income has dropped

so why am I going to spend more money than before

The BoE logic is totally f****ed up

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You say there are 6 times more savers than borrowers.

This may be true - I have no reason to doubt it - but I understand that the total amount of debt owed by the borrowers is greater than the total amount of deposits held by the savers.

I'm at work so don't have time to find a link but I believe this is a generally accepted fact.

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er...because you get that little interest you may as well spend? Just a guess...

I am very worried about inflation making my 'deposit' worthless. The temptation to blow the lot on a fancy holiday, shiny new TV and car is very tempting.

There is no point saving any money in this country any more, the Government quite simply do not want us to do it.

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Lower IRS make people buy big ticket items such as cars, houses. If your not getting as much for your savings and the monthly cost of buying a car or a house falls a bigger percentage will buy. Ofcourse that requires IRs on savings and loans to fall in parallel. Most people treat savings as a savings pot, NOT a form of income...

Edited by moosetea

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I am very worried about inflation making my 'deposit' worthless. The temptation to blow the lot on a fancy holiday, shiny new TV and car is very tempting.

There is no point saving any money in this country any more, the Government quite simply do not want us to do it.

and.. it clearly works :P

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Guest pioneer31
You say there are 6 times more savers than borrowers.

This may be true - I have no reason to doubt it - but I understand that the total amount of debt owed by the borrowers is greater than the total amount of deposits held by the savers.

I'm at work so don't have time to find a link but I believe this is a generally accepted fact.

I would hazard a guess that they cancel each other out, the amount (6 times more) savers get hammered for will equal the amount borrowers save, so no more money to spend.

Experiment failed

Edited by pioneer31

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Is that how human beings think?

I'm saving for a deposit but now that my overall income has decreased, I'm going on a spending spree?

Spock wouldn't agree with that one.

But your deposit is growing by the day as house prices crash and you don't even need to save as house prices will crash to around £120,000

10% Deposit of £200,000 is £20,000 ave house price 2008

but as house prices crash.

10% Deposit of £120,000 is £12,000.

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I don't think it will work, although we will probably never be able to measure it accurately as it will be swamped by the tsunami of problems anyway.

My view is that if everyone is in fear of losing their job, they aren't going to be splurging on those purchases.

With banks tightening credit, the only thing is for people to pay off their debts.

If you don't have debt, take some of your savings and get out of the pound.

On the other hand, you could wait until you are told that you will be getting 1 New Pound, for your 1,000,000 old pounds. :ph34r:

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Guest pioneer31
Lower IRS make people buy big ticket items such as cars, houses. If your not getting as much for your savings and the monthly cost of buying a car or a house falls a bigger percentage will buy. Ofcourse that requires IRs on savings and loans to fall in parallel. Most people treat savings as a savings pot, NOT a form of income...

before the IR slash, I could afford a car for cash (from my deposit fund)

I still can but now my monthly income is lower, so why am I more likely to buy one now?

Most people look at overall monthly income when making purchasing decisions., not inflation or any other economic data

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Guest pioneer31
But your deposit is growing by the day as house prices crash and you don't even need to save as house prices will crash to around £120,000

10% Deposit of £200,000 is £20,000 ave house price 2008

but as house prices crash.

10% Deposit of £120,000 is £12,000.

I see your point but you're bringing other factors into it - ie what my deposit is intended for

In simple terms, (and that's the way the BoE seem to be operating) an IR cut can have either effect.

IR cuts are only a good bet if the whole country is living on credit (and despite press reports, they aren't)

Edited by pioneer31

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Hmm, I think there maybe something in this. Anecdotal:

I have loads of cash, nowhere sensible to put it anymore. Recently I have thought about bringing forward several major spending commitments because, well, why the hell not?

Car: Perhaps replace my s-reg toyota with something newer, as will need replacing sooner or later anyway

CH Boiler and kitchen: Both on last elbows, and,as it seems I'm stuck in current house for at least the next 3 years, why not buy now and get the benefit?

Just there is up to 15K I might spend over the next year that I wouldnt have spent had it not been for low interest rates (and, in the CH and kitchen, because of HPC). Sure I'm not alone .

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before the IR slash, I could afford a car for cash (from my deposit fund)

I still can but now my monthly income is lower, so why am I more likely to buy one now?

Most people look at overall monthly income when making purchasing decisions., not inflation or any other economic data

But look on the bright side you could have a fixed rate mortgage as 51% of all UK mortgage holders have and the rate cuts this year have not

help them in any way, if they have savings their savings rates have been cut their mortgage have stayed high as they are on fixed rates and

their house price has crashed by 15%or £32,000 in the last year. You're one of the lucky ones.

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So, dropping IR's like a stone will revive our Economy eh?

How does decimating interest on savings (which a great many people rely on) do anything? I, for one will be reigning in my spending, now that my income (earnings + interest) is being slashed.

OK, so the borrowers will get respite (for now, until the banks creep the rates back up again).

IF inflation drops to 1% or less and who says it will?, then things are still getting more expensive, even though my interest has been slashed by 1/3 (and more to come).

Every way you turn, you're buggered

There might be more savers than borrowers, but borrowers have borrowed more than savings. Why else have the banks turned to the wholesale market to fund mortgages. If savings covered what they had lent out then the banks wouldn't have needed to borrow money.

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Hmm, I think there maybe something in this. Anecdotal:

I have loads of cash, nowhere sensible to put it anymore. Recently I have thought about bringing forward several major spending commitments because, well, why the hell not?

Car: Perhaps replace my s-reg toyota with something newer, as will need replacing sooner or later anyway

CH Boiler and kitchen: Both on last elbows, and,as it seems I'm stuck in current house for at least the next 3 years, why not buy now and get the benefit?

Just there is up to 15K I might spend over the next year that I wouldnt have spent had it not been for low interest rates (and, in the CH and kitchen, because of HPC). Sure I'm not alone .

You are not alone but you are in a very small number of people who have 15k :)

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Guest pioneer31
er, buy a house then, when your own personal x an y axis cross?

I don't know how I'd get through the day without your insightful comments

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I am very worried about inflation making my 'deposit' worthless. The temptation to blow the lot on a fancy holiday, shiny new TV and car is very tempting.

There is no point saving any money in this country any more, the Government quite simply do not want us to do it.

Why not put it in dollars yen and euros? At least you've then thunk about it and attempted to do your best, rather than suffering from what we all have from time to time - investor paralysis. But as Moo points out up thread the average price of average house is currently falling by 30K per annum, with respect I doubt your investment/s is falling by that, therefore if your deposit is being saved and is safe and your only intended use is to buy a place then you are *winning* by so much it's difficult to see your problem :)

Put it this way, let's say you've got 50K and you would have put it into a 150K property in 2006, your deposit/equity would be near gone by mid 2009. Now you'll be able to pick up house for 100K and have 50% mortgage at a rate of perhaps 4% (once rates are at 1.5%)....and your problem is??? :)

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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